SCOTTISH energy giant SSE has agreed to sell its North Sea gas business to acquisitive Viaro Energy for £120 million amid the shake-up in the area .

The deal will allow London-based Viaro to acquire stakes in a range of big North Sea assets including the giant Laggan Tormore development West of Shetland.

It will let SSE complete its long-awaited exit from the North Sea exploration and production business.

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SSE has decided to focus its investment on renewable energy generation and related networks.

Oil and gas prices have plunged this year amid the fallout from the coronavirus crisis, prompting firms to slash spending in the North Sea and to put assets up for sale.

However, privately owned Viaro appears to have decided now is a good time to acquire North Sea assets.

Led by Italian entrepreneur Francesco Mazzagatti, Viaro entered the North Sea market through the acquisition of RockRose Energy for around £250m in July.

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The company will only have to pay SSE an initial £25m cash on completion, with the remainder of the consideration payable in three years.

Viaro may have to pay a further £40m if the gas price reaches agreed thresholds next year; and more if the Glendronach prospect, in the Greater Laggan Area, is brought into production.

SSE’s finance director, Gregor Alexander, said: “This sale clearly comes at a difficult time for the E&P sector, and the economy as a whole, but we believe it is the right move for our shareholders as we focus our resources on our core low-carbon businesses.”

SSE acquired a 20 per cent stake in the Greater Laggan area from Total for around £670m in 2015. It then paid a share of the costs involved in bringing the Laggan Tormore finds into production in 2016.

In June SSE revealed it had slashed the valuation of its North Sea gas production business by £291m following the plunge in commodity prices triggered by the coronavirus.

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The company said yesterday that it currently expected to record a small gain on the sale of the assets to Viaro.However, it has agreed to retain an obligation to pay 60 per cent of the decommissioning costs associated with the assets Viaro is acquiring.

Mr Mazzagatti said the deal demonstrated Viaro’s commitment to growth and to the United Kingdom Continental Shelf as a hydrocarbon province.

He added: "We are actively pursuing other opportunities."